Exhibit 10.1


 


AMENDED AND
RESTATED

EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT (this “Agreement”) between
EARTHLINK INC., a Delaware corporation, and CHARLES G. BETTY (referred to
herein as “You”) was entered into on October 27, 2005, effective as of July 1,
2005, and is hereby amended on March 27, 2006, to be effective as of its
original effective date.


 


RECITALS


 


1.                                       The Company is engaged in the business of
providing internet connectivity products and services (broadband, narrowband
and wireless) throughout the States of the United States and in other
geographical areas; and


 


2.                                       The Company has determined that in view of
Your knowledge, expertise and experience in the computer and information
services industries and in the internet communications (broadband, narrowband
and wireless) telecommunications industry segment, Your services as the Chief
Executive Officer of the Company have been and will be of great value to the
Company, and accordingly, the Company desires to enter into this Agreement with
You on the terms set forth herein in order to secure such services; and


 


3.                                       You desire to serve as the Chief Executive
Officer of the Company on the terms set forth herein.


 


NOW, THEREFORE, in consideration of Your employment by the
Company, the above premises and the mutual agreements hereinafter set forth,
You and the Company agree as follows:


 


1.                                      Definitions.


 


(a)                                  “Affiliate” means any entity with whom
the Company would be considered a single employer under Sections 414(b) or
414(c) of the Code.


 


(b)                                 “Beneficial Ownership” means
beneficial ownership as that term is used in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended.


 


(c)                                  “Business Combination” means a
reorganization, merger or consolidation of the Company.


 


(d)                                 “Business of the Company” means the
business of providing internet access services via broadband, narrowband and/or
wireless means. The Business of the Company constitutes the core business of
the Company, but is a subset of all segments of the business in which the Company
is engaged.


 


(e)                                  “Cause” means (i) Your commission
of any act of fraud or dishonesty relating to and adversely affecting the
business affairs of the Company; (ii) Your


 


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conviction of any felony; or (iii) Your
habitual failure after written notice specifying such failure and a reasonable
opportunity to cure such failure to perform Your duties hereunder responsibly.


 


(f)                                    “Change in Control Event” of the
Company means the occurrence of any of the following events:


 


(1)                                  The accumulation in any number of related or
unrelated transactions by any Person of Beneficial Ownership of more than fifty
percent (50%) of the combined voting power of the Company’s Voting Stock;
provided that for purposes of this subparagraph (1), a Change in Control Event
will not be deemed to have occurred if the accumulation of more than fifty
percent (50%) of the voting power of the Company’s Voting Stock results from
any acquisition of Voting Stock (a) directly from the Company that is
approved by the Incumbent Board, (b) by the Company, (c) by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Affiliate, or (d) by any Person pursuant to a Business Combination
that complies with clauses (a) and (b) of subparagraph (2) below;
or


 


(2)                                  Consummation of a Business Combination,
unless, immediately following that Business Combination, (a) all or
substantially all of the Persons who were the beneficial owners of Voting Stock
of the Company immediately prior to that Business Combination beneficially own,
directly or indirectly, at least fifty percent (50%) of the then outstanding
shares of common stock and at least fifty percent (50%) of the combined voting
power of the then outstanding Voting Stock entitled to vote generally in the
election of directors of the entity resulting from that Business Combination
(including, without limitation, an entity that as a result of that transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions relative to each other as their ownership, immediately prior to
that Business Combination, of the Voting Stock of the Company, and (b) at
least sixty percent (60%) of the members of the Board of Directors of the
entity resulting from that Business Combination holding at least sixty percent
(60%) of the voting power of such Board of Directors were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board of Directors providing for that Business Combination and as
a result of or in connection with such Business Combination, no Person has a
right to dilute either of such percentages by appointing additional members to
the Board of Directors or otherwise without election or other action by the
stockholders; or


 


(3)                                  A sale or other disposition of all or
substantially all of the assets of the Company, except pursuant to a Business
Combination that complies with clauses (a) and (b) of subparagraph
(2); or


 


(4)                                  Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company, except pursuant to a
Business Combination that complies with clauses (a) and (b) of
subparagraph 2.


 


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(g)                                 “Code” means the Internal Revenue Code
of 1986, as amended, and any regulations promulgated thereunder.


 


(h)                                 “Company” shall mean EarthLink, Inc.


 


(i)                                     “Confidential Information” means any
and all non-public information concerning, relating to and/or in the possession
of the Company and/or its Affiliates and/or the Business of the Company treated
as confidential or secret by the Company and/or its Affiliates (that is, such
business information is subject to efforts by the Company and/or its Affiliates
that are reasonable under the circumstances to maintain its secrecy) that does
not constitute a Trade Secret, including, without limitation, information
concerning the Company’s or an Affiliate’s financial position and results of
operations (including revenues, assets, net income, etc.), annual and long
range business plans, product and service plans, marketing plans and methods,
employee lists and information, in whatever form and whether or not computer or
electronically accessible.


 


(j)                                     “Eligible Earnings” has the same
meaning given to that term in the Company’s bonus plan and payroll policies.


 


(k)                                  “Incumbent Board” means a Board of
Directors at least a majority of whom consist of individuals who either are (a) members
of the Company’s Board of Directors as of the effective date of the adoption of
the AV/SP (as defined in Section 4(d)(2)) or (b) members who become
members of the Company’s Board of Directors subsequent to the date of the
adoption of the AV/SP whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least sixty percent (60%) of the
directors then comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which that person is named as
a nominee for director, without objection to that nomination), but excluding,
for that purpose, any individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (within the meaning of Rule 14a-11
of the Securities Exchange Act of 1934, as amended) with respect to the
election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board of
Directors.


 


(l)                                     “Person” means any individual, entity
or group within the meaning of Section 13(D)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended.


 


(m)                               “Specified Employee” means an employee
who is (i) an officer of the Company or an Affiliate having annual
compensation greater than $135,000 (with certain adjustments for inflation
after 2005), (ii) a five-percent owner of the Company or (iii) a
one-percent owner of the Company having annual compensation greater than
$150,000. For purposes of this Section, no more than 50 employees (or, if
lesser, the greater of three or 10 percent of the employees) shall be treated
as officers. Employees who (i) normally work less than 17 1/2 hours per
week, (ii) normally work not more than 6 months during any year, (iii) have
not attained age 21 or (iv) are included in a unit of employees covered by
an agreement which the Secretary of Labor finds to be a collective bargaining
agreement between employee representatives and the Company or an Affiliate
(except as


 


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otherwise provided in regulations issued under the
Code) shall be excluded for purposes of determining the number of officers. For
purposes of this Section, the term “five-percent owner” (“one-percent owner”)
means any person who owns more than five percent (one percent) of the
outstanding stock of the Company or stock possessing more than five percent
(one percent) of the total combined voting power of all stock of the Company. For
purposes of determining ownership, the attribution rules of Section 318
of the Code shall be applied by substituting “five percent” for “50 percent” in
Section 318(a)(2) and the rules of Sections 414(b), 414(c) and
414(m) of the Code shall not apply. For purposes of this Section, the term “compensation”
has the meaning given such term by Section 414(q)(4) of the Code. The
determination of whether You are a Specified Employee will be based on a December 31
identification date such that if You satisfy the above definition of Specified
Employee at any time during the 12-month period ending on December 31, You
will be treated as a Specified Employee if You have a Termination of Employment
during the 12-month period beginning on the first day of the fourth month
following the identification date. This definition is intended to comply with
the “specified employee” rules of Section 409A(a)(2)(B)(i) of
the Code and shall be interpreted accordingly.


 


(n)                                 “Termination of Employment” means the
termination of Your employment and service with the Company and all Affiliates.
You will not be considered as having had a Termination of Employment if (i) You
continue to provide services to the Company or any Affiliate as an employee at
an annual rate that is at least equal to 20 percent of the services rendered,
on average, during the immediately preceding three full calendar years of
employment (or, if employed less than three years, such lesser period) and the
annual remuneration for such services is at least equal to 20 percent of the
average annual remuneration earned during the final three full calendar years
of employment (or if less, such lesser period), (ii) You continue to
provide services to the Company or any Affiliate in a capacity other than as an
employee and such services are provided at an annual rate that is 50 percent or
more of the services rendered, on average, during the immediately preceding
three full calendar years of employment (or, if employed less than three years,
such lesser period) and the annual remuneration for such services is 50 percent
or more of the annual remuneration earned during the final three full calendar
years of employment (or, if less, such lesser period) or (iii) You are on
military leave, sick leave or other bona fide leave of absence (such as
temporary employment by the government) so long as the period of such leave
does not exceed six months, or if longer, so long as Your right to reemployment
with the Company or any Affiliate is provided either by statute or by contract.
If the period of leave (i) ends or (ii) exceeds six months and the
Your right to reemployment is not provided either by statute or by contract,
the Termination of Employment will be deemed to occur on the first date
immediately following such six-month period if not reemployed by the Company or
any Affiliate before such time and eligibility for payments and benefits
hereunder will be determined as of that time. For purposes of this Section,
annual rate of providing services shall be determined based upon the
measurement used to determine Your base compensation.


 


(o)                                 “Total Disability” means Your
inability, through physical or mental illness or accident, to perform the
majority of Your usual duties and responsibilities hereunder (as such duties
are constituted on the date of the commencement of such disability) in the
manner and to the extent required under this Agreement for a period of at least
ninety (90)


 


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consecutive days. Total Disability shall be deemed
to have occurred on the first day following the expiration of such ninety (90)
day period.


 


(p)                                 “Trade Secrets” means any and all information concerning,
relating to and/or in the possession of, the Company and/or its Affiliates
and/or the Business of the Company that qualifies as a trade secret as defined
by the laws of the State of Georgia on the date of this Agreement and as such
laws are amended from time to time thereafter.


 


(q)                                 “Voting Stock” means the then
outstanding securities of an entity entitled to vote generally in the election
of members of that entity’s Board of Directors.


 


2.                                      Employment; Duties.


 


(a)                                  The Company agrees to employ You as Chief
Executive Officer of the Company with the duties and responsibilities generally
associated with such positions and such other reasonable additional responsibilities
and positions as may be added to Your duties from time to time by the Board of
Directors consistent with Your positions.


 


(b)                                 During Your employment hereunder, You shall (i) diligently
follow and implement all management policies and decisions communicated to You
by the Board of Directors; and (ii) timely prepare and forward to the
Board of Directors all reports and accountings as may be requested of You.


 


(c)                                  Your duties and responsibilities hereunder
shall be modified and/or excused during reasonable periods of absence due to
Your health or disability or vacation, as provided herein.


 


3.                                      Term. The term hereof shall commence on July 1,
2005, shall continue for a period of three (3) years and shall be
automatically extended from year-to-year thereafter unless terminated in
accordance with Section 6 hereof (the “Term”).


 


4.                                      Compensation.


 


(a)                                  (1) You shall be paid an annual base
salary of not less than Seven Hundred Twenty-Five Thousand Dollars ($725,000)
per year (the “Base Salary”) commencing on July 1, 2005. The Base Salary
shall accrue and be due and payable in equal, or as nearly equal as
practicable, biweekly installments and the Company may deduct from each such
installment all amounts required to be deducted and withheld in accordance with
applicable federal and state income, FICA and other withholding tax
requirements.


 


(2)                                  The Base Salary shall be reviewed by the
Board of Directors at least once during each year of the Term and may be
increased from time to time and at any time by the Board of Directors. The Base
Salary shall in no event be reduced or decreased below the highest level
attained at any time by You, unless You and the Board of Directors agree to
implement a temporary salary reduction program for cost abatement purposes.


 


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(3)                                  If the Term shall begin on other than the
first business day of a calendar month and if the Term hereof shall terminate
on other than the last day of a calendar month, Your compensation for such
month shall be prorated according to the number of days during such month that
occur within the Term.


 


(b)                                 For the fiscal year of the Company ending on December 31,
2005, You shall be entitled to receive an annual target bonus opportunity in an
amount equal to seventy-five percent (75%), with the opportunity to over
achieve up to one hundred twelve percent (112%), of Your Eligible Earnings if
the bonus criteria for such annual period are satisfied (the “Target Bonus
Payment”). Commencing with the fiscal year of the Company ending on December 31,
2006 and for each fiscal year thereafter, the percentage of Your Eligible
Earnings for determining Your annual target bonus opportunity shall be
seventy-five percent (75%), with the opportunity to over achieve up to one
hundred fifty percent (150%), of Your Eligible Earnings if the bonus criteria
for such annual period are satisfied. Any increase in the percentage of Your
Eligible Earnings for determining Your annual target bonus opportunity for the
fiscal years of the Company ending after December 31, 2006, shall be set
by the Board of Directors on a Company fiscal year basis. The target bonus
opportunity percentage and criteria to earn Your Target Bonus Payment for each
year of the Term shall be based upon good faith negotiations between You and
the Board of Directors. All Target Bonus Payments that become payable shall be
paid to You on or before the last day of February in the year following
the year in which Your right to such Target Bonus Payment becomes vested.


 


(c)                                  While You are performing the services
described herein, the Company shall reimburse You for all reasonable and
necessary expenses incurred by You in connection with the performance of Your
duties of employment hereunder. Such reimbursements shall be made as soon as
administratively practical following Your request for reimbursement, but (i) Your
request must be made prior to the end of the first month after the end of the
calendar year in which You incur such expenses and (ii) provided that You
have submitted a timely request for reimbursement, the reimbursement shall be
made not later than the 15th day of the third month following the
end of the calendar year in which You incur such expenses.


 


(d)                                 (1) The Company now maintains, and while
You are rendering services to the Company may establish, one or more additional
incentive or other compensation plan(s) (however described or denominated) for
the corporate, operating or executive officers or other management of the
Company, or if the Company now maintains or, while You are rendering services
to the Company, continues and/or establishes any benefit program(s) (however
described or denominated) for corporate, operating or executive officers or
other management employees of the Company, You shall be eligible to fully
participate, and shall participate, in each such plan or benefit program.


 


(2)                                  Pursuant to this Section 4(d), You are
now and shall continue to participate in the Change-In-Control Accelerated
Vesting and Severance Plan adopted by the Compensation Committee of the Board
of Directors of the Company at its April 19, 2001 meeting and any plan(s)
or program(s) that supercede, replace and/or supplement such plan, as in effect
from time to time (the


 


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“AV/SP”), at the highest and most beneficial
level of participation provided under the AV/SP. With respect to each
individual benefit, or category of similar benefit, provided to You under each
of the AV/SP and this Agreement, the two (2) benefits shall not be cumulative,
and You shall be entitled to receive each such benefit, or category of benefit,
under the terms of the AV/SP or the terms of this Agreement, whichever would be
the greater amount or value to You, except that the timing and manner of
payment of such benefits shall be consistent with the terms of this Agreement,
regardless of whether the amount or value of the benefits You are entitled to
receive are determined under the AV/SP or this Agreement. The restrictions on
cumulation of benefits in this Section 4(d)(2), and the application of the
terms of the AV/SP to benefits provided thereunder, shall not apply to Your
right to qualify for and participate in the AV/SP at the highest and most
beneficial level of participation.


 


(e)                                  During the Term, the Company shall provide
health, medical, disability and term life insurance to You and Your family in
accordance with any group plan which it now maintains or which may hereafter be
established by the Company. In addition, the Company shall reimburse You, for
Your term life insurance policy payments under a policy or policies with
aggregate death benefits of $3,000,000 held by You (and under any replacement
policies). Such reimbursements shall be made as soon as administratively
practical following Your request for reimbursement, but (i) Your request
must be made prior to the end of the first month after the end of the calendar
year in which You incur such expenses and (ii) provided that You have
submitted a timely request for reimbursement, the reimbursement shall be made
not later than the 15th day of the third month following the end of
the calendar year in which You incur such expenses. After your death, these
benefits shall be payable to Your estate or a beneficiary or beneficiaries
designated by You from time to time.


 


(f)                                    You shall receive not less than four (4) weeks
paid vacation during each twelve (12) month period of Your employment. Such
vacation period may be increased from time to time and at any time by the Board
of Directors but shall in no event be shortened to less than the longest period
attained by You at any time during Your employment. To the extent that You do
not use Your accrued vacation during such twelve (12) month period, any
remaining accrued vacation shall be subject to the carryover restrictions
applicable in the Company’s normal vacation policies.


 


5.                                      Stock Options.


 


(a)                                  Pursuant to a Non-Qualified Stock Option
Agreement dated February 19, 1998 (the “Option Agreement”), You were
granted options to purchase 150,000 shares of the common stock of the Company
at $44.75 per share (the “Option Shares”) under the EarthLink Network, Inc.
1995 Stock Option Plan (the “Plan”). Upon Your exercise of these options in
accordance with the Option Agreement, the Company has agreed to pay to You
$24.75 with respect to each share of the Option Shares purchased by You. This
agreement by the Company was and is intended to provide to You additional
compensation for Your services tied to Your purchase of the Option Shares. The
$24.75 amount payable to You with respect to Your purchase of each Option Share
was and is subject to equitable


 


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and proportional adjustment in accordance with the
adjustment and exchange mechanisms in the Plan with respect to the exchange, number
and pricing of the Option Shares. Your right to this additional compensation on
Your exercise of these options is nonforfeitable and shall only expire to the
extent Your Option Agreement expires unexercised.


 


As of January 28, 2003, Your exercise of the
options for the Option Shares since the grant and corporate actions taken by
the Company as anticipated in the Plan, have caused adjustments to be made in
the number of Option Shares subject to unexercised options, the $44.75 exercise
price and the per exercised Option Share cash of $24.75 payable to You upon
exercise. Accordingly, the parties agree that the following facts are accurate
as of January 28, 2003:  (1) the
balance of Your Option Shares subject to unexercised options is 193,800 shares
of the common stock of the Company; (2) the exercise price is $13.85 per
Option Share; and (3) the cash payable to You upon exercise of the options
and purchase of the Option Shares is $7.66 per Option Share.


 


(b)                                 Your options to purchase voting common stock
of the Company described in Section 5(a) of this Agreement, the
restricted stock units granted to You prior to the date of this Agreement and
the other stock options and restricted stock units granted by the Company to
You from time to time prior to and after the date of this Agreement are
hereinafter collectively called the “Stock Options and RSUs.”  In the event (1) a Change in Control
Event occurs, or (2) You have a Termination of Employment by the Company
for other than “Cause” or on account of your death or Total Disability or (3) You
have a Termination of Employment by You for reasons of a breach by the Company
of this Agreement, all unvested Stock Options and RSUs (including the options
for the Option Shares) shall immediately vest in You and all such stock options
shall be fully exercisable by You; provided, however, in the event (i) a
Change in Control Event occurs before July 1, 2008; (ii) in
connection with that Change in Control Event, You are employed as the Chief
Executive Officer of the entity that is the subject of a Change in Control
Event described in Section 1(f)(1), or the surviving entity in a Business
Combination as described in Section 1(f)(2), or the entity that holds all
or substantially all of the assets of the Company pursuant to a transaction
described in Section 1(f)(3) (the “Change in Control Entity”); and (iii) the
Change in Control Entity is a public company with its voting common stock
registered and traded on the Nasdaq Stock Market or a national securities
exchange in the United States, all such unvested Stock Options and RSUs shall
not immediately vest in You. Instead, if all such unvested Stock Options and
RSUs do not immediately vest in You upon a Change in Control Event pursuant to
this Section 5(b), all such unvested Stock Options and RSUs (A) shall
continue to vest in You in accordance with the terms of the respective Stock
Option and RSU grants, and (B) in all events and notwithstanding any other
provision of this Agreement, shall immediately vest in You and be fully exercisable
by You upon the earlier of July 1, 2008, or the date on which You are no
longer the Chief Executive Officer of the Change in Control Entity unless,
prior to the earlier of either time, You are removed as Chief Executive Officer
for Cause or You resign as Chief Executive Officer for other than a breach by
the Company of this Agreement.


 


You
shall be given the period permitted under Your respective Stock Option
agreements to exercise Your Stock Options after Your Termination of Employment.
In the event of a conflict regarding the vesting of Your Stock Options and RSUs
between the terms of this Agreement and any other document, agreement or plan
pursuant to which You


 


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are granted any stock
options, restricted stock units or other forms of equity based compensation,
the terms of this Agreement shall control.


 


You hereby acknowledge that the Stock Options and
the Option Shares are and will be acquired by You for investment purposes with
no view to the sale or public distribution thereof. You further represent and
warrant to the Company that You are aware that the Company is relying upon Your
investment intent expressed hereinabove, and is issuing the Stock Options and
RSUs and the Option Shares pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended (“1933 Act”) under Section 4(2) thereof
as transactions “not involving any public offering.” You agree that the
transfer of the Stock Options and RSUs and the Option Shares to be issued to
You may be restricted if such restrictions are applicable to such security
generally or because of Your employment by or position with the Company or
because of the transaction pursuant to which You obtained such securities, that
a legend in form satisfactory to the Company including such restrictions may be
placed on any certificate representing any of the Stock Options and RSUs and
the Option Shares, that stop-transfer orders may be placed against the transfer
of any of the Stock Options and RSUs or the Option Shares in connection with
such restrictions and that neither the Stock Options and RSUs nor the Option
Shares will be and may not be sold or transferred by You unless You shall
satisfy the Company with such documentation as the Company in its absolute
discretion may request which may include an opinion of Your counsel acceptable
to the Company that such transfer is in full compliance with the provisions of
the 1933 Act, and the Rules and Regulations promulgated thereunder, and
that such transfer will not constitute or imply any violation of the 1933 Act,
or any of the Rules and Regulations promulgated thereunder by either the
Company or You.


 


(c)                                  If at any time or times after the date
hereof, the Company shall determine or be required to register any shares of
its capital stock or securities convertible into capital stock under the
Securities Act of 1933 whether in connection with a public offering of
securities by the Company (a “primary offering”), a public offering of
securities by shareholders of the Company (a “secondary offering”) or both, the
Company will promptly give You written notice thereof. If within 30 days after
Your receipt of such notice You request the inclusion of some or all of Your
Option Shares or other shares acquired by You pursuant to the Stock Options and
RSUs or otherwise (the “Registrable Securities”), the Company will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which You have requested be registered; provided, however, “best
efforts” shall not require that the Company include any Registrable Securities
held by You if such action would, in the Company’s discretion, have an adverse
effect on the negotiation, implementation or execution of any such public
offering. The Company shall pay all costs and expenses associated with the
registration of Your Registrable Securities including reasonable fees of legal
counsel. In connection with any registration statement in which You are
participating, You agree to furnish the Company with the personal information,
opinion letter, indemnifications and other items and materials necessary and/or
proper (and that are customarily and generally requested of parties with
similar registration rights) in connection with a registration of securities
under the Securities Act of 1933. The manner and content of any such
registration statement and of any underwriting or other agreements related
thereto, shall be entirely in the control and discretion of the Company. You
agree to cooperate with the Company in the preparation and filing of any
registration statement prepared and filed and shall make the customary


 


9

















 


agreements, representations, warranties and
indemnifications to the underwriters and/or the Company with respect to any
Registrable Shares included therein.


 


6.                                      Termination.


 


(a)                                  You may have a Termination of Employment only
as follows:


 


(1)                                  For Cause immediately by the Company; or


 


(2)                                  At Your option because of a breach of this
Agreement by the Company which is not cured within ten (10) days after
written notice of such breach is delivered to the Company, the Chairman of the
Board of Directors and the Chairman of the Compensation Committee of the Board
of Directors (as such positions/offices exist); or


 


(3)                                  At Your option upon thirty (30) days prior
written notice of termination delivered by You to the Company; or


 


(4)                                  For any reason by the Company upon three (3) calendar
months prior written notice of termination delivered to You, except during a
period of Your disability that may qualify as the period for qualification for
Your Termination of Employment due to Your Total Disability as set forth in Section 6(a)(6);
or


 


(5)                                  By the Company upon Your death; or


 


(6)                                  By the Company because of Your Total
Disability upon thirty (30) days prior written notice of termination delivered
to You.


 


(b)                                 Subject to Section 19 below, if, before
a Change in Control Event occurs, You have a Termination of Employment (i) by
the Company for other than “Cause,” (ii) because the Company elects not to
extend the Term at the end of the first three (3) years or any yearly
extension of the Term for other than Cause or (iii) by You for reasons of
a breach by the Company of this Agreement:


 


(1)                                  You shall be paid an amount equal to Your
Base Salary for a period equal to the longer of (i) twenty-four (24)
calendar months following the effective date of such Termination of Employment
or (ii) the remainder of the three (3) year term of this Agreement
(the “Severance Period”), plus Your unused vacation and two (2) calendar
months of Base Salary allocable to Your earned but unused sabbatical time as of
January 28, 2003. Such amount shall be paid in equal, or as nearly equal
as practicable, biweekly installments, at Your normal biweekly base salary
rate, starting with the first payroll payment date following your Termination
of Employment as described in this Section 6(b) and continuing until
such amount has been paid in full;


 


(2)                                  At the time specified in Section 4(b),
You shall receive all earned but unpaid Target Bonus Payments as well as the
earned but unpaid Target Bonus Payments based on the portion of the year that
You were employed by the


 


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Company in the year in which You had a
Termination of Employment in accordance with Section 4(b); and


 


(3)                                  The health, medical, life and disability
coverages afforded to You and Your family by the Company (or payments in lieu
thereof) as set forth in Section 4(e) shall be continued for the
Severance Period. In the event that such health, medical, life or disability
coverages are subject to Section 409A or You are to receive cash payments
in lieu of coverage, You will receive, during the Severance Period, payment for
such benefits in equal, or as nearly equal as practicable, biweekly cash
installments starting with the first applicable payroll payment date following
your Termination of Employment as described in this Section 6(b) and
continuing until such amounts have been paid in full. In such case, You shall
be required to pay the costs of such coverage to the extent You continue
participation. Your additional life insurance benefits provided in Section 4(e) shall
continue during the Severance Period and shall be paid as provided in Section 4(e).


 


(c)                                  Subject to Section 19 below, if, on and
after a Change in Control Event occurs, You have a Termination of Employment (i) by
the Company for other than “Cause,” (ii) because the Company elects not to
extend the Term at the end of the first three (3) years or any yearly
extension of the Term for other than Cause or (iii) by You for reasons of
a breach by the Company of this Agreement:


 


(1)                                  You shall be paid an amount equal to Your
Base Salary for a period equal to the longer of (i) twenty-four (24)
calendar months following the effective date of such Termination of Employment
or (ii) the remainder of the three (3) year term of this Agreement
(the “Severance Period”), plus Your unused vacation and two (2) calendar
months of Base Salary allocable to Your earned but unused sabbatical time as of
January 28, 2003. Such amount shall be paid in equal, or as nearly equal
as practicable, biweekly installments, at Your normal biweekly base salary
rate, starting with the first payroll payment date following Your Termination
of Employment as described in this Section 6(c) and continuing
thereafter, except that all remaining amounts left to be paid at such time
shall be paid in a single lump sum no later than the 15th day of the third
month following the calendar year in which a Termination of Employment as
described in this Section 6(c) occurs;


 


(2)                                  At the time specified in Section 4(b),
You shall receive all earned but unpaid Target Bonus Payments as well as the
earned but unpaid Target Bonus Payments based on the portion of the year that
You were employed by the Company in the year in which You had a Termination of
Employment in accordance with Section 4(b); and


 


(3)                                  The health, medical, life and disability
coverages afforded to You and Your family by the Company (or payments in lieu
thereof) as set forth in Section 4(e) shall be continued for the
Severance Period. In the event that such health, medical, life or disability
coverages are subject to Section 409A or You are to receive cash payments
in lieu of coverage, You will receive, during the Severance Period, payment for
such benefits in equal, or as nearly equal as


 


11

















 


practicable, biweekly cash installments
starting with the first applicable payroll payment date following your
Termination of Employment as described in this Section 6(c) and
continuing thereafter, except that, for amounts subject to Section 409A,
all remaining amounts left to be paid at such time shall be paid in a single
lump sum no later than the 15th day of
the third month following the calendar year in which the Termination of
Employment as described in this Section 6(c) occurs. In such case,
You shall be required to pay the costs of such coverage to the extent You
continue participation. Your additional life insurance benefits provided in Section 4(e) shall
continue during the Severance Period and shall be paid as provided in Section 4(e).


 


(d)                                 Subject to Section 19 below, in the
event that You have a Termination of Employment due to Your death or Your Total
Disability:


 


(1)                                  You or, in case of Your death, your estate
shall be paid an amount equal to Your Base Salary for a period of twenty-four
(24) calendar months, plus Your unused vacation and two (2) calendar
months of Base Salary allocable to Your earned but unused sabbatical time as of
January 28, 2003. Such amount shall be paid in equal, or as nearly equal
as practicable, biweekly installments, at Your normal biweekly base salary
rate, starting with the first payroll payment date following Your Termination
of Employment as described in this Section 6(d) and continuing
thereafter, except that all remaining amounts left to be paid at such time
shall be paid in a single lump sum no later than the 15th day of the
third month following the calendar year in which a Termination of Employment as
described in this Section 6(d) occurs;


 


(2)                                  At the time specified in Section 4(b),
You or, in case of Your death, Your estate shall receive all earned but unpaid
Target Bonus Payments as well as all earned and unpaid Target Bonus Payments
based on the portion of the year in which You died or incurred a Total
Disability, which You would have otherwise received but for the occasion of
Your death or Total Disability, in accordance with Section 4(b); and


 


(3)                                  You, other than after your death, and your
family will continue to receive the health, medical, life and disability
coverages afforded to You and them by the Company (or payments in lieu thereof)
as set forth in Section 4(e) (other than life or disability coverage
for You after Your death or Total Disability, respectively) for a period of
twenty-four (24) calendar months after Your death or Total Disability, as
applicable. In the event such Your health, medical, life or disability
coverages are subject to Section 409A or You or Your estate are to receive
cash payments in lieu of coverage, You or, in case of Your death, Your estate
will receive, during such twenty-four (24) calendar months, payment for such
benefits in equal, or as nearly equal as practicable, biweekly cash
installments starting with the first applicable payroll payment date following
your Termination of Employment as described in this Section 6(d) and
continuing thereafter, except that, for amounts subject to Section 409A,
all remaining amounts left to be paid at such time shall be paid in a single
lump sum no later than the 15th day of the third


 


12

















 


month following the calendar year in which
the Termination of Employment as described in this Section 6(d) occurs.
In such case, You and Your family shall be required to pay the costs of such
coverage to the extent You and Your family continue participation. Your
additional life insurance benefits provided in Section 4(e) shall
continue during the twenty-four (24) calendar months and shall be paid as
provided in Section 4(e).


 


(e)                                  In the event that You have a Termination of
Employment by the Company for Cause or by You for reasons other than a breach
of this Agreement by the Company, the Company will have no obligations to pay
You any amount beyond the effective date of such Termination of Employment
whether as Base Salary, Target Bonus Payment or otherwise or to provide You
with any benefits arising hereunder or otherwise except as required by law.


 


7.                                      Confidential Information and
Trade Secrets. You
acknowledge that the nature of Your engagement by the Company is such that You
shall have access to the Confidential Information and the Trade Secrets, each
of which has great value to the Company, provides the Company a competitive
advantage, and constitutes the foundation upon which the Business of the
Company is based. You agree to hold all of the Confidential Information and the
Trade Secrets in confidence and to not use, disclose, publish or otherwise
disseminate any of such Confidential Information and the Trade Secrets to any
other person, except to the extent such disclosure is (i) necessary to the
performance of this Agreement and in furtherance of the Company’s best
interests, (ii) required by applicable law, (iii) as a result of
portions of the Confidential Information and/or the Trade Secrets becoming
lawfully obtainable from other sources, (iv) authorized in writing by the
Company, or (v) necessary to enforce this Agreement. The restrictions set
forth in this Section 7 shall remain in full force and effect (a) with
respect to the Confidential Information, for the three (3) year period
following the effective date of Your Termination of Employment, and with
respect to the Trade Secrets, until the Trade Secrets no longer retain their
status or qualify as trade secrets under applicable law. Upon Your Termination
of Employment, You shall deliver to the Company all documents, records,
notebooks, work papers, and all similar material containing Confidential
Information and Trade Secrets, whether prepared by You, the Company or anyone
else.


 


8.                                      Inventions and Patents. All inventions, designs, improvements,
patents, copyrights and discoveries conceived by You during the term of this
Agreement which are useful in or directly or indirectly relate to the business
of the Company or to any experimental work carried on by the Company, shall be
the property of the Company. You agree to promptly and fully disclose to the
Company all such inventions, designs, improvements, patents, copyrights and
discoveries (whether developed individually or with other persons) and at the
Company’s expense, to take all steps necessary and reasonably required to
assure the Company’s ownership thereof and to assist the Company in protecting
or defending the Company’s proprietary rights therein.


 


9.                                      Restrictive Covenants.


 


(a)                                  You agree that during Your employment and for
a period of twenty-four (24) calendar months thereafter, You shall not,
directly or indirectly, whether as a member of executive management, corporate
officer, member of the Board of Directors (or similar body) or consultant to
any of the foregoing, participate or engage in any activity or other


 


13

















 


business competitive with the Business of the
Company within a thirty (30) mile radius of the Atlanta, Georgia, city limits. You
acknowledge that You continuously maintain and use an office in Atlanta,
Georgia.


 


(b)                                 You agree that during the term hereof and for
a period of twenty-four (24) calendar months thereafter, You will not, directly
or indirectly, induce, recruit, cause or hire any member of executive
management or any corporate officer of the Company or any of its Affiliates, or
any employee of the Company or any of its Affiliates engaged in product or
service development or product or service management, who has access to or
possession of Confidential Information and/or Trade Secrets, to leave their
employ with or their engagement by the Company or any of its Affiliates.


 


(c)                                  The obligation of the Company to continue to
fulfill its payment and benefit obligations to You pursuant to Sections 6(b) or
6(c) is conditioned upon Your compliance with the provisions of this Section 9
and Sections 7 and 8. Accordingly, in the event that You shall breach the
provisions of this Section 9 and/or Sections 7 and/or 8 and not cure or
cease (as appropriate) such breach within five (5) days of receipt of
notice thereof from the Company, the Company’s obligations under Sections 6(b) or
6(c) shall terminate. Termination of the Company’s obligations under
Sections 6(b) or 6(c) shall not be the Company’s sole and exclusive
remedy for a breach of this Section 9 and/or Sections 7 and/or 8. In
addition to the remedy provided in this Section 9(c), the Company shall be
entitled to seek damages and injunctive relief to enforce this Section 9
and Sections 7 and 8, in the event of a breach by You of this Section 9
and/or Sections 7 and/or 8. Additionally, in the event You breach such
provisions, You shall be required to repay to the Company all such amounts paid
pursuant to Section 6(c) that You would not have received had such
amount been paid in the same manner as Section 6(b) and You breached
such provisions.


 


(d)                                 The Company and You agree that in order to
properly and appropriately protect the Company, the territorial restrictions
set forth in Section 9(a) are intended by the parties to be as broad
as permitted by the laws of the State of Georgia, not to exceed the forty-eight
(48) contiguous states of the United States.


 


10.                               Remedies. The parties hereto agree that the services to
be rendered by You pursuant to this Agreement, and the rights and privileges
granted to the Company pursuant to this Agreement, are of a special, unique,
extraordinary and intellectual character, which gives them a peculiar value;
the loss of which cannot be reasonably or adequately compensated in damages in
any action at law, and that a breach by You of any of the terms of this
Agreement will cause the Company great and irreparable injury and damage. You
hereby agree that the definition of the Business of the Company set forth in Section 1
is correct, that the area of operation and market of the Company set forth in
Recital 1 is correct, and that the restricted territory described in Section 9(a) is
insufficient to protect the Company’s interests but provides at least some
level of protection to the Company which You deem necessary for the Company. You
hereby expressly agree that the Company shall be entitled to the remedies of
injunction, specific performance and other equitable relief to prevent a breach
of this Agreement by You. This Section 10 shall not be construed as a
waiver of any other rights or remedies which the Company may have for damages
or otherwise.


 


14

















 


11.                               Severability. In case any one or more of the provisions of
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, the same shall not affect any other provision of
this Agreement, but this Agreement shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.


 


12.                               Assignment. This Agreement and the rights and obligations
of the hereunder may not be assigned by either party hereto without the prior
written consent of the other party hereto.


 


13.                               Notices. Except as otherwise specifically provided
herein, any notice required or permitted to be given to You pursuant to this
Agreement shall be given in writing, and personally delivered or mailed to You
by certified mail, return receipt requested, at the address set forth below
Your signature on this Agreement or at such other address as You shall
designate by written notice to the Company given in accordance with this Section 13,
and any notice required or permitted to be given to the Company shall be given
in writing, and personally delivered or mailed to the Company by certified
mail, return receipt requested, addressed to the Company at the address set
forth under the signature of the Executive Vice President of the Company or his
designee on this Agreement or at such other address as the Company shall
designate by written notice to You given in accordance with this Section 13.
Any notice complying with this Section 13 shall be deemed received upon
actual receipt by the addressee.


 


14.                               Waiver. The waiver by either party hereto of any
breach of this Agreement by the other party hereto shall not be effective
unless in writing, and no such waiver shall operate or be construed as the
waiver of the same or another breach on a subsequent occasion.


 


15.                               Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of Georgia.


 


16.                               Beneficiary. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors, heirs, executors,
administrators and permitted assigns.


 


17.                               Entire Agreement. This Agreement embodies the entire agreement
of the parties hereto relating to Your employment by the Company in the
capacity herein stated and, except as specifically provided herein, no
provisions of any employee manual, personnel policies, Company directives or
other agreement or document shall be deemed to modify the terms of this
Agreement. No amendment or modification of this Agreement shall be valid or
binding upon You or the Company unless made in writing and signed by the
parties hereto. All prior understandings and agreements relating to Your
employment by the Company, in whatever capacity, are hereby expressly
terminated.


 


18.                               Excise Tax.


 


(a)                                  If any payment or distribution by the Company
and/or any Affiliate of the Company to or for Your benefit, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a “Payment”),
would


 


15

















 


be subject to the excise tax imposed by Section 4999
of the Code or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such tax (such tax or taxes, together
with any such interest and penalties, being hereafter collectively referred to
as the “Excise Tax”), then the payments and benefits payable or provided under
this Agreement (or other Payments as described below) shall be reduced (but not
below the amount of the payments or benefits provided under this Agreement) if,
and only to the extent that, such reduction will allow You to receive a greater
Net After Tax Amount than You would receive absent such reduction.


 


(b)                                 The Accounting Firm will first determine the
amount of any Parachute Payments that are payable to You. The Accounting Firm
also will determine the Net After Tax Amount attributable to Your total
Parachute Payments.


 


(c)                                  The Accounting Firm will next determine the
largest amount of Payments that may be made to You without subjecting You to
the Excise Tax (the “Capped Payments”). Thereafter, the Accounting Firm will
determine the Net After Tax Amount attributable to the Capped Payments.


 


(d)                                 You then will receive the total Parachute
Payments or the Capped Payments or such other amount less than the total
Parachute Payments, whichever provides You with the higher Net After Tax
Amount, but in no event will any such reduction imposed by this Section 18
be in excess of the amount of payments or benefits payable or provided under
this Agreement. If You will receive the Capped Payments or some other amount
lesser than the total Parachute Payments, the total Parachute Payments will be
adjusted by first reducing the amount of any noncash benefits under this
Agreement or any other plan, agreement or arrangement (with the source of the
reduction to be directed by You) and then by reducing the amount of any cash
benefits under this Agreement or any other plan, agreement or arrangement (with
the source of the reduction to be directed by You). The Accounting Firm will
notify You and the Company if it determines that the Parachute Payments must be
reduced and will send You and the Company a copy of its detailed calculations
supporting that determination.


 


(e)                                  As a result of the uncertainty in the
application of Code Sections 280G and 4999 at the time that the Accounting Firm
makes its determinations under this Section 18, it is possible that
amounts will have been paid or distributed to You that should not have been
paid or distributed under this Section 18 (“Overpayments”), or that
additional amounts should be paid or distributed to You under this Section 18
(“Underpayments”). If the Accounting Firm determines, based on either the
assertion of a deficiency by the Internal Revenue Service against the Company
or You, which assertion the Accounting Firm believes has a high probability of
success or controlling precedent or substantial authority, that an Overpayment
has been made, that Overpayment will be treated for all purposes as a debt ab initio that You must repay to the
Company together with interest at the applicable Federal rate under Code Section 7872;
provided, however, that no debt will be deemed to have been incurred by You and
no amount will be payable by You to the Company unless, and then only to the
extent that, the deemed debt and payment would either reduce the amount on
which You are subject to tax under Code Section 4999 or generate a refund
of tax imposed under Code Section 4999. If the Accounting Firm


 


16

















 


determines, based upon controlling precedent or
substantial authority, that an Underpayment has occurred, the Accounting Firm
will notify You and the Company of that determination and the amount of that
Underpayment will be paid to You promptly by the Company.


 


(f)                                    For purposes of this Section 18, the
following terms shall have their respective meanings:


 


(i)                                     “Accounting Firm” means the· independent
accounting firm engaged by the Company in the Company’s sole discretion.


 


(ii)                                  “Net After Tax Amount” means the amount of
any Parachute Payments or Capped Payments, as applicable, net of taxes imposed
under Code Sections 1, 3101(b) and 4999 and any State or local income
taxes applicable to You on the date of payment. The determination of the Net
After Tax Amount shall be made using the highest combined effective rate
imposed by the foregoing taxes on income of the same character as the Parachute
Payments or Capped Payments, as applicable, in effect on the date of payment.


 


(iii)                               “Parachute Payment” means a payment that is
described in Code Section 280G(b)(2), determined in accordance with Code Section 280G
and the regulations promulgated or proposed thereunder.


 


(g)                                 The fees and expenses of the Accounting Firm
for its services in connection with the determinations and calculations
contemplated by the preceding subsections shall be borne by the Company; If
such fees and expenses are initially paid by You, the Company shall reimburse
You the full amount of such fees and expenses within five business days after
receipt from You of a statement therefore and reasonable evidence of Your
payment thereof.


 


(h)                                 The Company and You shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or You, as the case may be, reasonably requested by
the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by the preceding subsections. Any determination by
the Accounting Firm shall be binding upon the Company and You.


 


(i)                                     The federal, state and local income or other
tax returns filed by You shall be prepared and filed on a consistent basis with
the determination of the Accounting Firm with respect to the Excise Tax payable
by You. You, at the request of the Company, shall provide the Company true and
correct copies (with any amendments) of Your federal income tax return as filed
with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such
conformity.


 


17

















 


19.                               Tax Liabilities and Code Section 409A. You are solely responsible for the payment of
any tax liability (including any taxes and penalties that may arise under Section 409A
of the Code) that may result from any payments or benefits that You receive
pursuant to this Agreement. Any such payments or benefits shall be subject to
reduction for any applicable employment or withholding taxes. Notwithstanding
any other provision of this Plan, if You are a Specified Employee, and if the
amounts that You are entitled to receive pursuant to Section 6 are not
otherwise exempt from Section 409A of the Code, then to the extent
necessary to comply with Section 409A, no payments for such amounts may be
made under this Agreement (including, if necessary, any payments for welfare or
other benefits in which case You may be required to pay for such coverage or
benefits and receive reimbursement when payment is no longer prohibited) before
the date which is six (6) months after Your Termination of Employment or,
if earlier, Your date of death. All such amounts, which would have otherwise
been required to be paid over such six (6) months after Your Termination
of Employment or, if earlier, your date of death, shall be paid to you in one
lump sum payment as soon as administratively feasible after the date which is
six (6) months after Your Termination of Employment or, if earlier, your
date of death. All such remaining payments shall be made as if they had begun
as set forth in this Agreement. This Agreement is intended to comply with the
applicable requirements of Section 409A of the Code and shall be construed
and interpreted in accordance therewith. The Company may at any time amend,
suspend or terminate this Agreement, or any payments to be made hereunder, as
necessary to be in compliance with Section 409A of the Code to avoid the
imposition on You of any potential excise taxes relating to Section 409A. Notwithstanding
the preceding, the Company and its Affiliates shall not be liable to You or any
other person if the Internal Revenue Service or any court or other authority
having jurisdiction over such matter determines for any reason that any amount
under this Agreement is subject to taxes, penalties or interest as a result of
failing to comply with Code Section 409A.


 


18

















 


IN WITNESS WHEREOF, You and the Company have executed and delivered
this Agreement as of the date first shown above.


 


	
  YOU:

  	
  THE COMPANY:

  
	
   

  	
   

  
	
  CHARLES G. BETTY

  	
  EARTHLINK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Charles G. Betty

  	
   

  	
  By: 

  	
  /s/ Kevin M. Dotts

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
  Name:

  	
  Kevin Dotts

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President - Finance and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1375 Peachtree Street

  
	
   

  	
   

  	
  7-North

  
	
   

  	
   

  	
  Atlanta, GA 30309

  
								



 


19